Dev Lal , Bundi vs Department Of Income Tax

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vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR

Jh vkj-ih-rksykuh] U;kf;d lnL; ,oa Jh Vh-vkj-ehuk] ys[kk lnL; ds le{k BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM

vk;dj vihy la-@ITA No. 533/JP/2012 fu/kZkj.k o"kZ@Assessment Year : 2002-03.

Income Tax Officer, cuke Shri Dev Lal S/o Sh. Mangi Bundi. Vs. Lal, Sheopuria Ki Bawari, Bundi. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No. AAOPL 1652R vihykFkhZ@Appellant izR;FkhZ@Respondent

jktLo dh vksj ls@ Revenue by : Shri Kailash Mangal (JCIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri Sudhir Sogani (Advocate)

lquokbZ dh rkjh[k@ Date of Hearing : 12.05.2015. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 19.6.15

vkns'k@ ORDER

PER: R.P. Tolani, J.M.

This is an appeal filed by the Revenue against the order of ld. CIT (A),

Kota dated 30.03.2012. The following grounds are raised :-

" On the facts and in the circumstances of the case the ld. CIT (A), Kota has erred in :-

(i) Deleting the addition of Rs. 6,82,000/- on account of unexplained cash credits without examining the facts and circumstances mentioned by AO in details in the assessment order which clearly revealed that the cash credits were not established to be genuine.

2 (ii) Deleting the addition of Rs. 7,98,600/- on account of unexplained investment by just stating that the investment of Rs. 14,80,600/- is shown in the balance sheet & without examining even the genuineness of the sources of it.

2. Brief facts are that consequent to assessment for A.Y. 2003-04, AO found

that income for A.Y. 2002-03 in respect of unexplained unsecured loans and cash

credits of Rs. 6,82,000/- had escaped assessment. Consequently notice under

section 148 was issued on 07.04.2008 and served on 11.04.2008. Assessee

requested to treat the original return as the one filed in compliance of notice

under section 148. Assessee filed explanation in respect of both these issues,

which were rejected by AO by detailed findings, gist thereof is as under :-

(i) The affidavits filed by the assessee were cyclostyled, all mentioning

that assessee is close friend. The loans being advanced in A.Y. 2002-03

and repaid in March, 2007. The affidavits did not mention the age of the

deponents, source from where the loans were advanced, no rate of

interest was mentioned and the amount which was received on repayment

is not mentioned.

(ii) The affidavits were found to be non speaking and did not

demonstrate the creditworthiness to the assessee's claim that his counsel

advised not to file the details as the matter did not pertain to A.Y. 2003-04

reflected casual attitude of the assessee.

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(iii) Assessee accepted that the amounts remained as loan for five years

and none of the creditors insisted for payment of any interest. No prudent

person will believe this story which was an after thought.

(iv) The assessee's contentions were recorded in the books was found to

be unacceptable in view of the facts mentioned at page 2 of the order.

2.1. In view of these facts, the amount of Rs. 6,82,000/- was added as

assessee's taxable income.

II. Unexplained investment in shops and resorts :

2.2. Assessee was asked to submit details of construction expenses in

building shops and resorts amounting to Rs. 14,80,600/- giving the dtails about

the address of shops and resort, year-wise investment, copy of the map/plan,

source of investment made therein and date of commencement and completion

thereof. Assessee claimed that he entered into a Partnership with Mrs. Sohani

Bai in a firm registered in the name of M/s. Chandna Resorts on 18.01.2002.

Assessee's land was transferred to this firm as capital. The expenses were

incurred by M/s. Chandna Resorts and not by the assessee. The AO found that

the assessee's reply was not satisfactory as no details supported with documents

were filed. The amount of investment was held to be unexplained. However, set

off of Rs. 6,82,000/- added as unexplained cash credit was given resulting

balance addition of Rs. 7,98,600/- was added to the income. 4

2.3. Aggrieved, assessee preferred first appeal before ld. CIT (A) who deleted

the additions. The ld. CIT (A) on the issue of Cash Credits, after reproducing the

entire findings of the AO, decided the issue in favour of the assessee by

following observations :-

" The AO apparently made the addition without finding any real defect in the submission of the assessee but on the basis of certain presumptions. If the AO doubted the contention of assessee, he should have summoned the creditors. However, the AO made addition without doing so. It is also seen that the assessee vide letter dated 05.10.2009 submitted complete addresses of most of the creditors. The assessee vide letter dated 17.12.2009 also submitted identity proof of 32 creditors. The assessee further furnished confirmations from 35 creditors and also given source of their income, vide letter dated 17.12.2009.

In view of the above facts, it is held that addition of Rs. 6,82,000/- was not justified.

The AO is directed to delete addition of Rs. 6,82,000/-. This ground of appeal is allowed."

2.4. Apropos the addition of Rs. 7,98,600/- also after reproducing the

assessee's submissions and AO's observations deleted by following observations

:-

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" The AO treated investment of Rs.14,80,600/- in shop and resorts as unexplained. The assessee vide letter dated 05.10.2009 submitted that plot along with construction was appearing in the Balance Sheet of assessee as on 31.03.2001 and the same Balance Sheet was filed with the return of income for A.Y. 2001-02.

The assessee transferred this land to his partnership firm M/s. Chandna Resorts as his capital contribution.

In the Balance Sheet for the current year investment of Rs.14,80,600/- was reflected as investment in Chandna Resort. Whenever, a asset is shown in the Balance Sheet corresponding liabilities are also shown on other side. Unless these liabilities are found not genuine, no addition can be made by treating the asset as unexplained.

In my opinion, AO failed to understand the real nature of transaction.

In view of the above, the AO is directed to delete addition of Rs.7,98,600/-.

This ground of appeal is, therefore, allowed."

3. Aggrieved, the Revenue is before us. The ld. D/R contends that ld. CIT (A)

has not passed any speaking order in as much as after repeating the assessee's

letter dated 17.12.2009 filing confirmations from 35 creditors whereas the

assessment has been framed on 24.12.2009. It is a matter or record that 6

assessee on earlier occasions was asked to submit necessary evidence which

assessee deliberately avoided and filed at the fag end of the assessment. The

time gap of 7 days excluding the holidays is grossly insufficient for the AO to

verify the same. The adverse inference of delayed compliance will be held

against the assessee and not in his favour. The ld. CIT (A) ought to have

considered the crucial aspects and asked for further verification of 35 creditors

by calling a remand report. Similarly, in respect of investment in shop and resort,

in the absence of proper compliance, AO was left with no alternative but to make

the additions. Thus the relief awarded by ld. CIT (A) is without proper

justification and is not supported by a reason and speaking order. Thus there is

neither co-relation of any fact for the AO's objections nor any independent

finding to justify the deletion of additions. The ld. CIT (A)'s order being non-

speaking order, is unsustainable and deserves to be reversed.

4. The ld. Counsel for the assessee on the other hand relied on the order of

the ld. CIT (A) and contended that the assessee made the compliance which was

justifiable. Reference is made to consolidated order of ITAT Jaipur Bench dated

12.08.2011 in which the assessee was a party to it and partner in M/s. Chandna

Slab & Tiles and contribution of Rs.8,00,000/- in the said firm has been

accepted.

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5. The amount standing at the credit of the assessee in M/s. Chandna Resorts was on account of transfer of land and the expenditure on construction was incurred by the firm.

6. Thus the assessee has discharged its onus of proving the genuineness of

cash credits and explained the investment in the shops and resort. Order of ld.

CIT (A) has been relied on.

7. We have heard the rival submissions and perused the material available on

record. From the record, it clearly emerges that full compliance about the cash

creditors were made by assessee on 17.12.2009 as against the assessment itself

framed on 24.12.2009. The delayed filing of confirmations and affidavits is

attributable to assessee as he was repeatedly asked on earlier occasions to file

the same. Similarly, in case of investment in M/s. Chandna Resort also, the

assessee could not file proper documents before the AO in time and on these

facts and circumstances, the ld. CIT(A) ought to have called for a remand report

and applied his mind on the contents of the remand report. In any case, the

findings rendered in the ld. CIT (A)'s order awarding the relief are non-speaking

and do not specify the justification and reasons for awarding this relief. In the

entirety of facts and circumstances, we are inclined to set aside the issue back to

the file of AO to decide the same afresh after considering the material available

on record. Besides, by now the Chandna Resort issue must have taken a final

shape which also will help in deciding the issue.

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8. In the result, Revenue's appeal is allowed for statistical purposes.

Order pronounced in the open court on 19/6/15.

Sd/- Sd/- ¼Vh-vkj-ehuk½ ¼vkj-ih-rksykuh½ (T.R. Meena) (R.P. Tolani) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

t;iqj@Jaipur fnukad a @Dated:- 19/6/2015. *Das

vkns'k dh izfrfyfi vxzfs 'kr @ Copy of the order forwarded to:

1. vihykFkhZ@The Appellant-ITO, Bundi

2. izR;FkhZ@The Respondent-Shri Dev Lal, Bundi.

3. vk;dj vk;qDr@ CIT

4. vk;dj vk;qDr ¼vihy½@ The CIT(A)

5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@ DR, ITAT, Jaipur

6. xkMZ QkbZy@ Guard File (ITA No.533/JP/2012)

vkns'kkuqlkj@By Order,

Lkgk;d iathdkj@ Asst. Registrar